More exposure of Photofete

Prosecutor John Hueston returned to Photofete, the company started by Jeff Skilling’s girlfriend that had a $450,000 contract with Enron. Lay committed about $120,000 to Photofete.

Hueston noted that like Skilling, Lay never disclosed his investment to Enron’s board, a clear violation of the company’s ethics policy. After much wrangling, Lay acknowledged that he probably had, but said he really didn’t recall. In fact, he didn’t even remember the investment until it came up in the government’s cross-examination of Skilling.

The now-defunct Photofete has become a surprising weapon that the prosecution has used in an attempt to undermine the credibility of both defendants in this case.

Lay, by the way, continues to be a belligerent witness. At one point, when Hueston asked if he’d notified the board, Lay said he didn’t recall, but said he assumed Hueston had already checked.

“One thing you guys are is thorough,” he said.

After getting Lay to acknowledge the ethics violation, Hueston said, “Let’s go on to a different topic.”

11 Responses

the prosecution keeps beating this dead horse. this isnt even in the indictment and prominent politicians,like the governor of new jersey, do the same thing or worse. The only evidence the government has on lay is the lies of snitches and rats who have every reason to sing any song the government wants them to sing so as to spend as little time in jail as possible. the fact that there are 16 or more snitches doesnt matter – the government has brought unlimited resources to bear on folks of limited means and plea bargains are the only way to save some sort of financial security for their families. the real travesty of the whole thing is that prosecutors in their rush to indict and convict innocent people let fastow off with only 10 years when it is clear that the things he did and personally instigated are those very things that destoyed market confidence in enron and thus its business prospects. “for want of a nail…the army was lost”

Mr. Steffy, thank you for your continued “insightful” editorials on this trial for the people. Let’s hope the people win (big and little) who were “duped” out of millions by Kenny and his boys. Course he is now saying he was just an executive member of the ‘ole boys’ club with no voting rights in the clubhouse.

Let’s try to take an objective view. 3Q01 financials are restated, 1.2bn equity reduction, 600-700 mln profit reduction. This sends a very clear signal to the market that the broadly trumpeted profitability of Enron was not true. That does not include another 400mln reduction of profits, which was discussed.

The company, which represented itself as the pinnacle of corporate America, actually hardly earned any money.

Did management know this? Yes, they did. Done that, seen everything – I was there. Did they misrepresent the true state of the company? Yes, they did. Versus investors, employees etc.

In my book they are guilty.

Why does the prosection come back to Photofete? Simply because it shows something very important: Skilling and Lay did not care about business ethics; they invested in a business, which then did big bucks with Enron… It is as simple as this.

You might want to continue to rant about snitches and rats, but you will have to recognize that there are people, which are responsible for the total erasion of 401k’s, savings etc – Lay and Skilling.

Your logic is faulty. Not all government witnesses are “snitches and rats.” Not all government witnesses are facing jail time. I can think of at least four of the already called government witnesses who are not accused of any crime and thus are not facing any jail time. As a helpful exercise, can you figure out who the four are?

there are plenty of ceos running american companies today getting obsene payouts for engineering the destruciton of shareholder equity and destoying tens of thousands american jobs. who is bringing indictments against these folks?

as to the spes that destroyed enron,these are all too common, even in government. in my experience, it is not uncommon for local governmental authorities to set up off balance sheet corportions to move federal tax dollars off balance sheet and thus out of the view of HUD, so as to have a $ to pay off politicians, authority members and other insiders and their families with no bid contracts where work is never performed. congress and the fbi are well aware of these tactics and do nothing since these activities are so wide spread nationally that “too many people would get hurt.” the real solution is to forbid off balance sheet activities, which are so widely abused, but no one sees to have the stomach to solve the problem, it is so much easier to crucify a sacrificial lamb and present the appearance that the problem is solved.

great, 75% of the government witnesses are snitches and rats. How much of a case does the government have without the testimony of these snitches and rats? none at all.

As to the conflicts of interest, this is not what lay and skilling are on trial for. in my experience, similar conflicts of interest are very very common among powerful people in business and in government. in my opinion, these conflicts of interst prove nothing at all relating to the alleged crimes lay and skilling are charged with.

where is the documentary “smoking gun” relating to the alleged crimes lay and skilling are on trial for?

Your question about the lack of documents is a good point. It is a major point that may get freedom for the two defendants. It is making the prosecutions job very difficult.

At a previous employer, I worked with several people who refused to sign documents. I was amazed to observe that this did not hurt their careers or advancement! I believe that Jeff Skilling was too shrewd, too clever, too crafty to sign anything or use email.

Let’s have a look at the lack-of-documents issue. LJM deals had to be approved in accordance with RAC procedures. That menas that a bunch of people have to review it and sign it. Skilling’s signature line is there, but just his damn signature is missing.

Let’s think further. What does this mean? That Skilling did not see the RAC sheet? And the transaction is executed without proper approval?? No way, Jose. Remember: Skilling was a controls freak. So, in his own words, something like this could not have happened…

The other theory is that he saw everything, approved it, but avoided leaving a paper trail. Remember, he is the clever guy around…

To this former CEO, I think the unsigned LJM DASH documents are pretty damning tangible evidence.

To your point Wolfgang, had he claimed his lack of signature was proof he was unaware of what was going on and that the “conspirators” were doing things without his approval, that would at least make sense. BUT HE DIDN’T SAY THAT. Instead, he says he had no obligation to review LJM at all. Yet he obviously did.

As I’ve said in another thread here, the deals did get done. We are either left to believe the conspirators signed and executed DASH deals that Skilling was on the block for approving but did not approve — which would have landed the signatorees and executors in a boiling pot of hot water with Skilling when he found out they had done something without his approval — or they had his approval all along. Skilling hangs himself with his own words. You can’t be a “controls freak” and not know things are being done over your signature.